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Canada must outgrow its juvenile relationship with China

April 13, 2009

Pragmatic calculation of mutual self-interest
should be the driver, not the mood swings of any given day
The Globe and Mail (Canada)
April 10, 2009

Prime Minister Stephen Harper shakes hands with
Chinese President Hu Jintao in 2007.

Canadians often shy away from asserting or acting
upon their hard foreign policy interests. We tend
on occasion to confuse sentiment with substance
and fret that we may "need" other countries more
than they need us. Conversely, we sometimes
imagine that Canada is more important or has more
influence than our interests and capacity
warrant. Attitudes toward China suffer from all these proclivities.

The focus of Canada's China policy has tended to
concentrate somewhat erratically on the two
bookends of trade and human-rights issues with
not much productive dialogue on either, and with
a large gap between the two. The focus of China's
Canada policy seems to be access to Canadian
resources and to the Canadian market, combined
with hair-trigger sensitivities about perceived
insults or slights by Canada over visits by the
Dalai Lama or Prime Minister Stephen Harper's
non-attendance at the Beijing Olympics. Symbolism
is an element of diplomacy, but it should not
displace calculations of how interests are best served.

While there is clearly potential for a more
broadly gauged foundation for the relationship,
there are also practical limitations to the scope
of the partnership and influence that Canada can
achieve with China. For one thing, any decision
to engage in a more mature manner must be shared
by both countries and guided systematically from
the top level of both governments. The Chinese
are known for taking a long view on world
affairs. Canada's long view on China should start
with a more precise definition of what we wish to achieve and how.

A good place to start would be on a more
substantial economic partnership. While there has
been growth in two-way trade in the past decade,
it has not matched the pace of China's economic
growth and has shifted dramatically in China's
favour, despite a steady stream of Team Canada,
provincial and even municipal junkets to China
(notably under the previous government), and this
week, the visit of Stockwell Day, the Minister of
International Trade, to announce the opening of five trade offices in China.

Canadian exports to China rose from $4.2-billion
in 2001 to $9.5-billion in 2007, whereas Chinese
exports to Canada have more than tripled in the
same period, from $12.7-billion to $38.3-billion
in 2007. Still, the relative percentage is tiny
for both countries: roughly 2 per cent of
Canada's total exports, 3 per cent of China's.
(Over the same years, Australia's exports to
China soared from $5.2-billion to $16.4-billion.
Since it does not have the luxury of the world's
largest economic power on its border, Australia
is obliged to behave more strategically with its
neighbours.) Governments in Canada cannot will or
direct increases in trade or investment. They
can, however, encourage more diversity and better
use of supply chains and, more generally, they
can help create an environment in which producers
and entrepreneurs will thrive.


A comprehensive Canada-China investment treaty
would fill a serious gap in the economic
relationship. Notwithstanding the pivotal role of
investment in economic performance, there is no
bilateral or multilateral treaty to govern
Canada-China investment relations. A bilateral
treaty has the potential of transforming the
relationship from a neutral to a dynamic future.
It would establish international standards of
investment protection for Canadian investors in
China. It would grant Chinese investors the right
to invest in Canada, including in the resource
sector, subject to the proviso that Chinese firms
operate these investments on normal commercial
terms. Such a treaty would encourage Canadian
firms to invest in China and integrate Chinese
production into their supply chains. It would
give Canada new markets for resource exports.

Never forget that, because of its system of
government, China can pick and choose partners
for political, as well as economic, reasons.
Unlike in Canada, the government in China
controls all the levers of choice and makes
virtually all the decisions. A Canada-China
investment treaty would tell Canadian investors
that the economic relationship is backed by a
solid political relationship, immune from
episodic frictions arising, for example, from
nettlesome consular cases. As part of its plan to
reduce barriers to foreign investment, the
government should make a conscious effort to
attract more investment from China.

There are also global economic and political
interests that factor into a rejuvenated
Canada-China calculus. At the top of the list is
the rise of China as a major global economy and
the third-largest global trader (after the
European Union and the United States and ahead of
Japan). Powerful economic growth in China drove
global resource demand and prices relentlessly
upward until a few months ago. The precipitous
decline in Chinese exports to recession-stricken
Western economies has driven demand and prices
rapidly downward. An early resumption of rapid
growth in China is critical to Canada and the global economy.

That is one reason why Canada should robustly
support the full integration of China into the
global institutions of economic governance. It is
very much in Canada's interest that China be
accorded the status and voting power in
institutions such as the IMF and the World Bank
that are warranted by its economic importance and
potential. We should be working pragmatically
with other countries to achieve this goal.

Geopolitically, it is vitally important that
China become a more active global player. More
often than not, China's foreign policy reflects a
single-minded pursuit of its national interest,
whether it's access to resources in Africa or
Latin America or broader relations with
neighbouring Asian nations, including notably
Myanmar and North Korea, ostensibly to ensure
greater stability in its own region.

But its neutrality on sensitive issues such as
Darfur and Iran's nuclear ambitions limits its
capacity to become a more effective player in
global affairs. To some extent, China has played
such a role in the six-power talks over North
Korea's nuclear ambitions, although the progress
so far has been marginal. A real resolution,
especially after last Sunday's missile launch,
hinges on decisive actions by China. China should
be encouraged to play a more significant role in
settling conflicts in Africa and the Middle East.
Even though China borders on Afghanistan, it has
been essentially detached from events in that
beleaguered nation and from the threat posed more
generally by extremist Islamic terrorism.


China's military expenditures are estimated to be
increasing by at least 40 per cent a year,
reflecting, among other things, aspirations for a
full-fledged blue-water navy. India's and Japan's
military expenditures are increasing at a slower
yet still substantial pace. Inevitably, the
military balance of power in Asia will shift. How
the U.S. reacts and whether this trend enhances
or decreases stability in the region is certain
to be a more pressing foreign-policy issue for
the next decade. Australia has moved to conclude
a security arrangement with Japan. Japan, in
turn, is forging new security links with India.
The Shanghai group linking Russia, China,
Kazakhstan, Tajikistan, Kyrgyzstan and Uzbekistan
adds a different dimension to the equation.

Where does Canada see itself in this evolving
chess game? Standing aloof may give us the
privilege of neutrality but would more likely
confirm a position of continuing irrelevance. In
order to make prudent choices, we need, first, a
clear formulation of how our national and global
interests can best be served and of the extent to
which we are prepared to contribute responsibly
in the region that is likely to dominate in the
decades ahead. A more mature partnership with
China would be a key element in that equation.

Canada has different values on human rights and a
different system of government from China's.
These differences cannot be ignored but they
should not hobble broader engagement in areas of
mutual interest. We do not have to camouflage our
differences. Nor do we have to "go along or
kowtow to get along." That is a juvenile concept
that has nothing to do with fundamental foreign
policy analysis. A more adult approach to the
relationship by both countries would allow for
honest disagreements on issues such as human
rights. There may also be differences on global
issues of common concern, but these should not
displace the opportunity for a broader, more
substantive economic and global partnership.

What is critically important, and not just to
Canada, is how an increasingly powerful China
responds to challenges affecting global commerce,
the environment and security. Equally certain is
the plain fact that Canada, among others, has
critical long-term stakes in a politically stable
and economically prosperous China, particularly
as both would bolster China's ability to become
what Robert Zoellick, the president of the World
Bank, once described as a "more responsible
stakeholder" in world affairs. That in itself
would be a commendable foreign-policy objective
for Canada. Above all, a pragmatic calculation of
mutual self-interest should be the major driver,
and not the mood swings of any given day.

* Derek Burney is a former Canadian ambassador to
the United States. He is a senior strategic
adviser to Ogilvy Renault and senior research
fellow for the Canadian Defence and Foreign Affairs Institute.

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